Lee Wing-kan, former chairman of a de-listed electronics company, was sentenced to four and a half years' imprisonment here Friday by the Hong Kong District Court for defrauding letters of credits worth 94.6 million HK dollars ( 12.2 million U.S. dollars)

Lee, 50, former chairman of Yue Fung International Group Holding Limited (Yue Fung), was earlier found guilty of three counts of conspiracy to defraud letters of credit based on bogus business transactions.

Deputy Judge David Dufton said in sentencing that letters of credit frauds were "very serious" offenses, adding the fundamental to the credit system is the "truthfulness and accuracy of the documents."

The case arose from a corruption complaint in 2002 as the Independent Commission Against Corruption ICAC) launched subsequent inquiries before revealing the fraud offenses.

The court heard that between December 1998 and January 2002, Lee conspired with other persons to defraud a number of banks by dishonestly causing Yue Fung to apply for 37 letters of credit and six import loans in favor of a number of companies.

In order to support the applications, they submitted false documents to the banks, purportedly evidencing genuine underlying transactions related to the purchase and resale of electronic parts between Yue Fung and those companies, according to ICAC.

Investigations revealed that, in fact, some of those companies were either set up purely for the arrangement of bogus transactions, or had no business dealings with Yue Fung at all.

As a result of the fraudulent scam, the banks released more than 94.6 million HK dollars of letters of credit and import loans to those companies.

The court heard that the funds were subsequently reverted to Yue Fung.

Source: Xinhua